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Title:Inflationary performance in a monetary union with large wage setters PDF Logo
Authors:Cavallari, Lilia
Issue Date:2001
Series/Report no.:ZEI working paper B 11-2001
Abstract:Building on a micro-founded model of a two region-world economy in the tradition of the new open economy literature, this paper analyses the strategic interaction of large wage-setters and the central bank when switching from a regime of uncoordinated national monetary policies to a monetary union. The establishment of a monetary union is shown to favour wage restraint, provided the uni…ed central bank is not too conservative. Wage discipline may reduce equilibrium in‡ation in a monetary union relative to the one under uncoordinated national monetary policies when wage setting is centralised across member countries.
Subjects:monetary union
wage bargaining
inflationary bias
JEL:E5
F4
Document Type:Working Paper
Appears in Collections:ZEI Working Papers, Zentrum für Europäische Integrationsforschung, Universität Bonn

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